In Ireland a very difficult 2009 ended without firm solutions to many problems posed by the global financial crisis, though government efforts to impose pay cuts, increase taxes, and reduce public spending signaled that the task of rebuilding the economy had begun. The scale of the damage caused by the crisis would previously have been unimaginable. Early in the year Ireland’s two major financial institutions, Allied Irish Banks and the Bank of Ireland, were on the brink of default; lending had stopped, unfinished construction sites were boarded up, and drastic job cuts occurred as businesses slashed expenses. In February the government agreed to provide Allied Irish Banks and the Bank of Ireland each approximately $5.25 billion in recapitalization funds, and in September it proposed legislation to set up a state-run “bad bank”—known as the National Asset Management Agency—to absorb nonperforming loans from a number of domestic commercial banks and thereby enable those institutions to resume normal commercial lending.

A government advisory committee, the Special Group on Public Service Numbers and Expenditure Programmes, chaired by economist Colm McCarthy, published a report in July that identified $7.5 billion in possible public spending cuts, including a 5% reduction in social welfare payments and the elimination of more than 17,000 public-sector jobs. In setting out a menu of options for the 2010 annual budget, the McCarthy report included numerous measures that would be politically difficult to implement. Among the more controversial suggestions were cuts in health care spending, the closure of half of all police stations, and sharp reductions in payments to farmers. As the December deadline for the annual budget approached, tensions emerged in the coalition government led by Fianna Fáil and the Green Party, with a number of backbench members of Fianna Fáil withdrawing their support for the government and the Green Party threatening to withdraw support until it had secured concessions on protecting education spending and in other areas.

Prime Minister Brian Cowen had a torrid first 18 months in office, receiving blame for the country’s economic problems and for squandering the budget surplus. Local government and European Parliament (EP) elections held in June gave no comfort to the ruling coalition. Both Fianna Fáil and the Greens lost seats in county and city council elections, while the opposition Fine Gael and Labour Party made gains. Sinn Féin, however, was unable to capitalize on the economic travails, losing its sole EP seat and failing to make expected gains elsewhere. The recently formed pan-European Libertas party, which had campaigned against the Lisbon Treaty on EU organization, also disappointed its supporters, failing to win a single EP seat. After having initially rejected the Lisbon Treaty in a 2008 referendum, Irish voters passed the measure by a margin of 67% to 33% in a new referendum held in October.

Not all of Ireland’s woes were political or economic. The Commission to Inquire into Child Abuse, which was established in 2000 to investigate the abuse of children in Catholic-run residential institutions in Ireland from the 1930s onward, published its final report in May. The report concluded that beatings and neglect were routine and that sexual abuse was “endemic” in many institutions and also that church authorities were often aware of the abuse and made efforts to protect offenders from legal charges. In a leading editorial, the Irish Times described the report as a “map of an Irish hell.” A separate inquiry into child-abuse allegations against clergy members in Dublin was concluded in July; led by Judge Yvonne Murphy, the inquiry focused on allegations made against 46 priests between 1975 and 2004 and on how those complaints were handled by the archdiocese of Dublin. The inquiry’s findings were turned over to the Department of Justice, and though they were not immediately made public, the archbishop of Dublin, Diarmuid Martin, stated that the findings, when released, would “horrify and shock.”

Consumer prices in Ireland continued to fall. In November the Consumer Price Index showed prices down 5.7% over a 12-month period. In the first 10 months of the year, housing prices fell by 12.7% (this figure referred only to completed home sales). Unemployment continued to rise throughout the year. From January to November the seasonally adjusted rate was 12.5%—almost double that of a year earlier. Net emigration resumed, with an estimated 65,100 people emigrating during the 12 months ended in April—an increase of more than 40% over the previous 12-month period—while the number of immigrants declined from 83,800 to 57,300. The number of births reached 74,500 during 2009, the largest figure attained since 1896.

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